IPO for China's top social network pops in first-day trading

China's top social-networking site has gone public, and whatever your stance on whether Silicon Valley is in a bubble there's little denying that the party is on for RenRen.

Beijing-based RenRen went public at $14 a share, and jumped as much as 71 percent before settling back to $19.50 as of this morning.

As Bloomberg reports, the IPO price valued each dollar of RenRen's 2010 sales nearly three times more highly than recent venture-capital deals valued U.S. social-networking leader Facebook. Traders said the price was a bet that the Chinese economy's faster growth and lower levels of Internet penetration gives RenRen even more room to grow.

Maybe. But big mid-2000s gains in so-called ChinaNet IPOs like travel agency Ctrip.com International Ltd. and portal site Sina were possible partly because most of those stocks were much cheaper when they went public than their U.S. counterparts. Retail investors who hope to grab a piece of the encore might ask themselves whether the Wall Street pros have already scooped up the easy money this time.

These charts show how lucrative Chinese Net IPOs can be. But of the stocks shown, only search engine Baidu was anywhere near as expensive when it went public as RenRen is now.

Tim Mullaney is our guest blogger working in Tech Live for the next few weeks. To reach the author of this post, e-mail him at Tim@tim-mullaney.com.

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